Clouds Mean Cash for Small Towns, Large Tech Goliaths

Just as I’m assembling a pattern of posts, dinners and newsletters about cloud computing and its impacts on networking and security hardware and innovation, along comes this June 20 blog by Rich Miller about Quincy, WA.  If you’ll remember, I just blogged about “Who will Ride the Clouds.”  In my blog I talked about the historical impact of access, resources and innovation on wealth:

When spice trade routes shifted to the ocean the overall Middle East economy went from optimism to despair, from science and enlightenment to xenophobia.  Factories gradually replaced artisans around the world and agriculture went through a series of cycles depending on access to trade routes and distances from markets (in addition to weather and practices, etc).  A coming shift to cloud computing could be as influential in wealth distribution as any previous shift in factors of production and access.

Mark Anderson has mentioned Quincy several times in his SNS Newsletter.  I used to see the Quincy mileage markers when I drove to Wenatchee from the Puget Sound region, so I didn’t pay much attention to his comments until I read Rich’s comments about the impact of data centers on this small farming town of 5300:

New data centers from Microsoft, Yahoo and several other high-tech firms are providing a significant boost to the economy of Quincy, Washington, local officials said this week. Quincy city administrator Tim Snead told the Wenatchee World that the building phase of the new data centers server farms had a huge impact on the city’s sales taxes. After receiving $700,000 in sales taxes in 2005, Quincy’s tax revenue grew to $1.5 million in 2006 and nearly tripled to $4.3 million last year.

Sales tax revenue is expected to recede as a number of data center projects are completed, reducing the volume of construction workers at local sites. Quincy is a small farm town that had 5,300 residents when it was selected for the Microsoft project in 2006. Yahoo, Ask.com, Intuit, Sabey Corp. and Base Partners have since announced projects in central Washington.

The Quincy Factor is interesting because it signals that a shift may already be underway in how technology companies are optimizing factors of production.  Washington State has a sizable hydropower industry that has kept electricity relatively cheap compared to other states.  Microsoft, Yahoo and others are placing strategic bets on cloud computing.

Will central Washington become a cloud computing powerhouse, or will it merely be one of many VM hops as the world’s IT innovators establish cloud-driven service fabrics in places once off the beaten path?

For a community considering a casino project in a rural backwater as a source of revenue and service industry jobs, the prospects of data centers, construction projects and eventually higher paying IT service jobs might not seem far fetched, especially if electrons are cheap.  For service providers often based in larger, high costs metropolitan areas, cloud computing could decouple the ability to deliver advanced services from the high cost of real estate and metropolitan congestion.

Service providers who understand this trend and ride the cloud could dominate a global industry, if policy makers understood the strategic importance of these projects and created favorable economic and regulatory environments.  If they don’t then enterprising rural townships in more inviting nations may be the next to experience the rainmaking abilities of cloud computing.

There are technology limitations to VMs hopping clouds, including security and traffic management, which I’ve already discussed.  I’ll be talking about a few other issues and startups tackling them in upcoming posts at Archimedius.

Disclosure: none